13th May 2015 07:36
LONDON (Alliance News) - UK stocks opened higher Wednesday, with the focus on European first-quarter GDP readings and the Bank of England's inflation report, due at 1030 BST, while Mondi shares soar after reporting a much higher quarterly operating profit.
The FTSE 100 trades up 0.2% at 6,947.12, the FTSE 250 is up 0.4% at 17,761.09, and the AIM All-Share index is up 0.2% at 758.62.
European stocks also have started higher after Tuesday's losses, with the CAC 40 in Paris up 0.6%, and the DAX 30 in Frankfurt up 0.5%.
Mondi is leading the FTSE 100 gainers Wednesday morning, up 7.8%, after reporting a 29% increase in operating profit excluding exceptional items in the first quarter of 2015, driven by higher volumes and lower input costs across most of Europe, strong contributions from capital projects and acquisitions, and higher selling prices in Russia and South Africa.
The paper company said its underlying operating profit in the three months to end-March, which excludes what it terms as special items, was EUR236 million, up from EUR183 million a year earlier, and up 9% from EUR216 million in the fourth quarter of 2014.
Meanwhile, Barrat Developments is up 2.4%. The housebuilder said it remains on track to report a significant improvement in its results in the year to end-June, as it expects housing completions to be ahead of previous guidance and as it reported a 17.9% increase in total forward sales by May 10.
The company said it now expects housing completions for the year to June 30 to be about 16,100, up from 14,838 in its last financial year, and it said forward sales including joint ventures stood at GBP2.59 billion as of May 10, up from GBP2.20 billion on May 11, 2014.
SABMiller shares are up 2.1%. The brewer reported flat pretax profit in its recently ended financial year, as its revenue fell very slightly, it was hit by currency exchange rate changes, and it booked costs associated with joint ventures and acquisitions. The company, whose brands include Grolsch, Peroni, Coors Light beers and Bulmers cider, reported a pretax profit for the year ended March 31 of USD4.8 million, flat on the year before, on revenue of USD22.1 million, down slightly from USD22.3 million.
Compass Group is the biggest faller, down 2.5%, even tough it reported a rise in profit in the first half of its financial year, boosted by strong sales in North America and the emerging markets. The catering and outsourcing company reported a 4.9% rise in pretax profit for the six months to March 31 to GBP621 million, while its organic revenue grew 5.7% to GBP8.9 billion. Its operating margin increased by 10 basis points to 7.5%.
Severn Trent, flat at 2,126 pence, said it is selling its water purification business to joint venture partner Industrie De Nora in a deal that values the whole unit at USD99 million and Severn Trent's share at USD81.2 million. The water utility said its share will be settled by a cash payment of USD20.1 million, or GBP12.6 million, and the rest through the settlement of net intercompany debt. It expects the sale to complete at the end of June.
In the economic front, France reported Q1 GDP growth of 0.6% quarter-on-quarter and 0.7% on year, above expectations. Meanwhile, the German economy grew by an adjusted 1% year-on-year, slowing from 1.4% in the fourth quarter of 2014.
German gross domestic product rose 0.3% sequentially in the quarter, slower than the 0.7% expansion seen a quarter ago. It was also weaker than the 0.5% growth forecast by economists.
Italian Q1 GDP is due at 0900 BST, while Eurozone Q1 GDP is at 1000 BST.
"Now that the election is out of the way, today?s Bank of England inflation report could well see Governor Mark Carney upgrade the central banks growth and inflation forecasts for the UK economy, over the next 12 months, as well as giving him much more free reign to be candid about the health of the UK economy, without any political constraints," says Michael Hewson, senior markets analyst at CMC Markets UK.
Oanda analyst Craig Erlam adds: "Market interest rate hike expectations appear to have been widely pushed back to next year now, but with the economic recovery clearly on a strong footing and rising oil prices likely to provide a lift to the inflation outlook, I wonder if Carney may put later this year back on the table. It will also be interesting to hear the banks view on the election outcome and what impact this will have."
In Asia on Wednesday, the Japanese Nikkei 225 closed up 0.7%. Meanwhile, in Hong Kong, the Hang Seng index and the Shanghai Composite are down 0.6%.
Wall Street ended lower Tuesday. The DJIA closed down 0.2%, the S&P 500 ended down 0.3%, and the Nasdaq Composite finished down 0.4%.
Also in the economic calendar Wednesday, the UK ILO unemployment rate is at 0930 BST. In the US, retail sales are due at 1330 BST, while EIA crude oil stocks are at 1530 BST.
By Daniel Ruiz; [email protected]
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Related Shares:
Barratt DevelopmentsCompass GroupSevern TrentMondiSAB.L